Robinhood Q3 2024 results: Strong growth and new innovations

DBT Bureau

Pune, 31 Oct 2024

Robinhood Markets, Inc. reported financial results for the third quarter of 2024, which ended September 30, 2024.

“I’m really proud of our Q3 results and how smoothly our product engine is humming,” said Vlad Tenev, CEO and Co-Founder of Robinhood. “In the past month, we introduced Robinhood Legend, our new desktop offering, and announced index options, futures, and a realized profit and loss tool are coming soon. And just this week, we launched our Presidential Election Market. We have a ton of momentum, and we’re just getting started.”

“Q3 was another strong quarter, as we drove 36% year-over-year revenue growth, and dropped most of that to the bottom line,” said Jason Warnick, Chief Financial Officer of Robinhood. “We entered 2024 with the goal of delivering another year of profitable growth, so we’re excited to have already broken prior full-year records for both revenue and EPS.”

Third Quarter Results:

Total net revenues increased 36% year-over-year to $637 million.
Transaction-based revenues increased 72% year-over-year to $319 million, primarily driven by options revenue of $202 million, up 63%, cryptocurrencies revenue of $61 million, up 165%, and equities revenue of $37 million, up 37%.
Net interest revenues increased 9% year-over-year to $274 million, primarily driven by growth in interest-earning assets.
Other revenues increased 42% year-over-year to $44 million, primarily due to increased Gold subscription revenues.
Total net revenues were reduced by $27 million in Q3 2024 (and $13 million in Q2 2024) due to matches paid to customers on transfers and deposits.
Net income increased year-over-year to $150 million, or diluted earnings per share (EPS) of $0.17, compared to a net loss of $85 million, or diluted EPS of -$0.09, in Q3 2023.
Total operating expenses decreased 10% year-over-year to $486 million. This includes a $10 million regulatory accrual, which compares to a $104 million regulatory accrual in Q3 2023.
Adjusted Operating Expenses (non-GAAP) increased 12% year-over-year to $397 million primarily due to increased marketing and growth investments.
Share-Based Compensation (SBC) decreased 5% year-over-year to $79 million.
Adjusted EBITDA (non-GAAP) increased 96% year-over-year to $268 million.
Funded Customers increased by 1.0 million year-over-year to 24.3 million.
Investment Accounts increased by 1.5 million year-over-year to 25.1 million.
Assets Under Custody (AUC) increased 76% year-over-year to $152.2 billion, driven by continued Net Deposits and higher equity and cryptocurrency valuations.
Net Deposits were $10.0 billion, an annualized growth rate of 29% relative to AUC at the end of Q2 2024. Over the past twelve months, Net Deposits were $39.0 billion, a growth rate of 45% relative to AUC at the end of Q3 2023.
Average Revenue Per User (ARPU) increased by 31% year-over-year to $105.
Gold Subscribers increased by 860 thousand, or 65%, year-over-year to 2.2 million.
Cash and cash equivalents totaled $4.6 billion compared with $4.9 billion at the end of Q3 2023.
Share repurchases were $97 million, representing 5.0 million shares of our Class A common stock at an average price per share of $19.42.

Highlights

Robinhood takes major steps toward delivering on its product roadmap and winning the active trader market.

Building for Active Traders – In October 2024, Robinhood began rolling out Robinhood Legend, a powerful, sleek browser-based desktop trading platform built from the ground up for active traders and announced that it will launch futures and index options in the coming months with some of the lowest contract fees in the industry.
Robinhood Hosts its First Ever Customer-Focused Conference – In October 2024, Robinhood held its inaugural HOOD Summit, bringing together over 400 customers with Robinhood executives and other industry leaders for a three-day event to discuss the latest in trading technology, investing, and culture.
More than 9 percent of Robinhood Funded Customers benefit from Robinhood Gold – Gold Subscribers reached new highs of 2.2 million in Q3 2024. Additionally, Robinhood Gold Cards continue to roll out, now in the hands of nearly 100 thousand customers.
Robinhood Retirement Reaches $11 Billion in AUC – In October 2024, Robinhood Retirement reached $11 billion in AUC across nearly one million funded retirement accounts. Offering the first-ever IRA with a match, customers have received over $200 million in matches on retirement account transfers and contributions since launching in January 2023.
Expanding Our UK Product Offering – Robinhood introduced stock lending in the UK in September 2024 and launched margin investing for UK customers in October 2024. Robinhood has also received Financial Conduct Authority approval to offer options trading in the UK and plans to launch in 2025.

Additional Q3 2024 Operating Data